Te Connectivity Plc · NYSE:TEL
Te Connectivity — Q2 2021 Earnings Presentation
27 slides from Te Connectivity's earnings presentation, Apr 21, 2021
Slide 1: TE Connectivity Second Quarter 2021 Earnings
EVERY CONNECTION COUNTS TE Connectivity Second Quarter 2021 Earnings April 21, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstanc
Slide 3: Earnings Highlights
Earnings Highlights Strong Q2 results above guidance with double digit Sales growth and Record Adjusted EPS • Sales of $3.7B, up 17% on a reported basis and 11% organically Y/Y • Transportation up 15% organically Y/Y, with double-digit growth in all businesses • Industrial down 4% organically Y/Y, d
Slide 4: Segment Orders Summary
Reported FY20 FY21 FY21 Q2 Growth Q2 Q1 Q2 Y/Y Q/Q Transportation 1,849 2,537 2,766 50% 9% Industrial 1,051 956 1,126 7% 18% Communications 467 556 678 45% 22% Total TE 3,367 4,049 4,570 36% 13% Book to Bill 1.05 1.15 1.22 Segment Orders Summary ($ in millions) 4 • Transportation and Communications
Slide 5: Transportation Solutions
Transportation Solutions $1,857 $2,287 Q2 2020 Q2 2021 • Automotive organic sales growth of 14% with growth in all regions, YTD content outperformance as expected • Commercial Transportation organic growth driven by market growth and content gains due to stricter emissions standards • Sensors organi
Slide 6: Industrial Solutions
Industrial Solutions $962 $952 Q2 2020 Q2 2021 Y/Y Growth Rates Reported Organic Aerospace, Defense and Marine $267 (16)% (21)% Industrial Equipment 339 21% 16% Medical 161 (13)% (13)% Energy 185 4% 4% Industrial Solutions $952 (1)% (4)% Adjusted Operating Margin declines driven by lower AD&M volume
Slide 7: Communications Solutions
$376 $499 Q2 2020 Q2 2021 Reported Up 33% Organic Up 29% Y/Y Growth Rates Reported Organic Data & Devices $278 28% 24% Appliances $221 40% 35% Communications Solutions $499 33% 29% • Data & Devices growth driven by market strength as well as share gains and content growth from high-speed cloud appli
Slide 8: Q2 Financial Summary
Q2 Financial Summary ($ in Millions, except per share amounts) Q2 FY20 Q2 FY21 Net Sales $ 3,195 $ 3,738 Operating Income (Loss) $ (415) $ 612 Operating Margin (13.0%) 16.4% Acquisition-Related Charges 12 8 Restructuring & Other Charges, Net 22 17 Impairment of Goodwill 900 - Adjusted Operating Inco
Slide 9: Q2 Financial Performance
Q2 Financial Performance $3,195 $3,522 $3,738 Q2 2020 Q1 2021 Q2 2021 $1.29 $1.47 $1.57 Q2 2020 Q1 2021 Q2 2021 Adjusted EBITDA Margin 21.9% 23.0% 22.2% 16.2% 17.7% 17.0% Q2 2020 Q1 2021 Q2 2021 Adjusted Operating Margin, Adjusted EPS, Adjusted EBITDA Margin and Free Cash Flow are non-GAAP financial
Slide 10: Additional Information
EVERY CONNECTION COUNTS Additional Information
Slide 11: Y/Y Q2 2021 Sales and Adjusted EPS Bridge
Y/Y Q2 2021 Adjusted EPS is a non-GAAP financial measure; See Appendix for description and reconciliation. Sales (in millions) Adjusted EPS Q2 2020 Results $3,195 $1.29 Operational Performance 393 0.22 FX Impact 150 0.08 Tax Rate Impact -(0.02) Q2 2021 Results $3,738 $1.57 11
Slide 12: Y/Y Q3 2021 Guidance Bridge
Y/Y Q3 2021 Adjusted EPS is a non-GAAP financial measure; See Appendix for description and reconciliation. Sales (in millions) Adjusted EPS Q3 2020 Results $2,548 $0.59 Operational Performance 1,044 1.01 FX Impact 108 0.01 Tax Rate Impact -(0.04) Q3 2021 Guidance $3,700 $1.57 12
Slide 13: Free Cash Flow and Working Capital; Liquidity, Cash and Debt
($ in Millions) Q2 2020 Q2 2021 Beginning Cash Balance $742 $1,098 Free Cash Flow 311 477 Dividends (153) (159) Share repurchases (269) (140) Net increase in debt 383 411 Acquisition of businesses, net of cash acquired (244) - Other 26 61 Ending Cash Balance $796 $1,748 Total Debt $4,355 $4,521 A/R
Slide 14: Appendix
EVERY CONNECTION COUNTS Appendix
Slide 15: Description of Non-GAAP Measures
15 Non-GAAP Financial Measures We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financia
Slide 16: Non-GAAP Measure Definitions
16 • Adjusted EBITDA and Adjusted EBITDA Margin - represent net income (loss) and net income (loss) as a percentage of net sales, respectively, (the most comparable GAAP financial measures) before interest expense, interest income, income taxes, depreciation, and amortization, as adjusted for net ot
Slide 17: Segment Summary
Segment Summary 17 Transportation Solutions $ 2,287 $ 1,857 $ 4,511 $ 3,725 Industrial Solutions 952 962 1,825 1,889 Communications Solutions 499 376 924 749 Total $ 3,738 $ 3,195 $ 7,260 $ 6,363 Transportation Solutions $ 398 17.4 % $ (606) (32.6) % $ 706 15.7 % $ (290) (7.8) % Industrial Solutions
Slide 18: Net Sales Growth
Reconciliation of Net Sales Growth 18 Transportation Solutions (3): Automotive $ 265 19.4 % $ 184 13.5 % $ 81 $ — Commercial transportation 88 29.9 73 24.8 15 — Sensors 77 38.9 27 13.4 8 42 Total 430 23.2 284 15.3 104 42 Industrial Solutions (3): Aerospace, defense, oil, and gas (51) (16.0) (66) (20
Slide 19: Reconciliation for Quarter Ended March 26, 2021
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 26, 2021 19 Operating income: Transportation Solutions $ 398 $ 5 $ 10 $ 413 Industrial Solutions 111 3 5 119 Communications Solutions 103 — 2 105 Total $ 612 $ 8 $ 17 $ 637 Operating margin 16.4 % 17
Slide 20: Reconciliation for Quarter Ended March 27, 2020
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 27, 2020 20 Operating income (loss): Transportation Solutions $ (606) $ 10 $ 18 $ 900 $ — $ 322 Industrial Solutions 142 2 1 — — 145 Communications Solutions 49 — 3 — — 52 Total $ (415) $ 12 $ 22 $ 9
Slide 21: Reconciliation for Six Months Ended March 26, 2021
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Six Months Ended March 26, 2021 21 Operating income: Transportation Solutions $ 706 $ 10 $ 128 $ — $ 844 Industrial Solutions 187 7 43 — 237 Communications Solutions 167 — 13 — 180 Total $ 1,060 $ 17 $ 184 $ — $ 1,261 O
Slide 22: Reconciliation for Six Months Ended March 27, 2020
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Six Months Ended March 27, 2020 22 Operating income (loss): Transportation Solutions $ (290) $ 15 $ 22 $ 900 $ — $ 647 Industrial Solutions 257 4 16 — — 277 Communications Solutions 89 — 8 — — 97 Total $ 56 $ 19 $ 46 $
Slide 23: Reconciliation for Quarter Ended June 2020
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 26, 2020 23 Operating income (loss): Transportation Solutions $ (1) $ 6 $ 55 $ — $ 60 Industrial Solutions 70 2 40 — 112 Communications Solutions 65 — 3 — 68 Total $ 134 $ 8 $ 98 $ — $ 240 Operating m
Slide 24: Reconciliation for Quarter Ended December 25, 2020
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 25, 2020 24 Operating income: Transportation Solutions $ 308 $ 5 $ 118 $ — $ 431 Industrial Solutions 76 4 38 — 118 Communications Solutions 64 — 11 — 75 Total $ 448 $ 9 $ 167 $ — $ 624 Operating
Slide 25: Free Cash Flow
Reconciliation of Free Cash Flow 25 Net cash provided by operating activities $ 580 $ 481 $ 1,220 $ 892 Net cash used in investing activities (77) (378) (323) (667) Net cash provided by (used in) financing activities 151 (31) (101) (345) Effect of currency translation on cash (4) (18) 7 (11) Net inc
Slide 26: Adjusted EBITDA and Adjusted EBITDA Margin
Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin 26 Net income (loss) $ 506 $ 381 $ (456) (Income) loss from discontinued operations (1) (6) 4 Income tax expense 106 60 42 Other (income) expense, net (4) 1 (11) Interest expense 13 15 11 Interest income (8) (3) (5) Operating income (loss)
Slide 27: Forward-Looking Outlook Reconciliation to GAAP Measures
Reconciliation of Forward-Looking Non-GAAP Financial Measures to Forward-Looking GAAP Financial Measures 27 Diluted earnings per share from continuing operations $ 1.51 Restructuring and other charges, net 0.04 Acquisition-related charges 0.02 Adjusted diluted earnings per share from continuing oper